Let The Generals Lead

April 2, 2001
Kevin Haggerty

End-of-quarter
programs galore all week, but
daytraders caught a good uptrend on Friday from 11:15 a.m. on. If you trade the
futures and/or the different market SPDRs, you had a very profitable day — and
judging by some of the emails I received on Friday, there were many happy
campers who caught the reversal entry patterns. Both the S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) and
DIAs retraced to .618 of their Thursday lows and gave you basic reversal bar
entry patterns between 11:00 a.m. and 11:15 a.m. Friday morning. It was uptrend
for the rest of the day.Â

The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating)
continued the bashing of our ex-Chosen Ones. After a quick early gap up, it sold
off and took out Thursday’s lows, trading down to 1530.14, then reversed on that
same bar which was a wide-range outside bar, closing above its open at the top
of the range, and reversed two highs and three closes. This was also the 1.27
extension zone for the Thursday low of 1543.39 to Friday morning’s gap high
1580.85 leg. Once again by
combining the two day five-minute charts you got two retracement entries and one
extension entry. Save all three
charts — that’s another lesson. If I can put them on the site on Tuesday, I
will.

The opportunities certainly
weren’t limited to the indexes and futures. While position funds were forced to
“puke” stocks like
(
CIEN |
Quote |
Chart |
News |
PowerRating) and
(
JNPR |
Quote |
Chart |
News |
PowerRating) because of price, the
daytraders were able to capitalize on these same two stocks for big percentage
gains in a few hours. CIEN closed Thursday at 41.18, opened Friday at 39 1/8 and
traded down to the intraday low of 36.5 which was within a 13-bar Slim Jim
pattern between 37.5 and 36.5. It was staring you right in the face.

It broke out of the Slim
Jim above 37.5 which was also above the 8-period moving average of the highs,
and ran +17% to 44 by 2:00 p.m., with nothing resembling a stop out. If you
missed the Slim Jim breakout, you got a second chance on a breakout above 40
which was the first consolidation breakout to new intraday highs. This
one was a ten-bar range between 40 and 39. I
will include the CIEN chart tomorrow. It’s another basic lesson to keep for your
records. If you check your five-minute CIEN chart back to the swingpoint high of
48 15/16 last Wednesday, March 28, you will see that 44 is a .618 retracement of
that swing point.

The closing range has about
ten bars, all sitting with lows at about 40.75 vs. a close of 41.75. The first
short entry is a trade-through entry below 40.75, which is also below the
8-period moving average of the lows, and
if you don’t have that on your software, then it is below all of the 8-. 20-,
60- and 260-EMAs also on your five-minute chart. JNPR
wasn’t as dynamic as CIEN but still ran +10.4% on a breakout of the Slim Jim
above 37.

(June
Futures)

Fair Value

Buy

Sell

8.90

.10.30Â

Â 7.10Â

Pattern
Setups

At the end of the quarter
on Friday’s programs, the closes and volume don’t have the same significance, so
daily chart setups are iffy at best. Better
to start the day with a list of volatility stocks that are providing good
intraday travel both ways regardless of daily chart setups.

The
media circus has started the earnings season hype in size and the regional Fed
disciples and Greenspan will be in the headlines over the next two weeks. This
all spells increased volatility to me.

Have
a good trading day.

Let The Generals Lead

BUY THE FEAR, SELL THE GREED

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